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Eastside real estate market may have found a ‘new normal’

All told, 262 single family residences and 38 condominiums changed hands on Mercer Island in 2011.

Mercer Island’s Windermere Real Estate year in review states that sales volume was up 19 percent over 2010, with more Island homes sold than during any year since 2007.

Bonnie Sandborn, a Mercer Island native and managing broker with Windermere, said she believes 2012 will be good on Mercer Island in terms of activity. She is less sure about prices coming up.

The Windermere report says single family home and condominium prices in 2012 will continue to be impacted by the volume of distressed properties still to be cleared off the books.

“A strong buyer’s market prevails as interest rates remain at historic lows and prices round the bottom of the curve before regaining enough momentum to move back up,” the report says.

The most expensive home sales were in the Mercer Island School District’s boundaries, followed by Bellevue, then Issaquah.

On the Island, 88 sales were above $1 million, while only 15 were below $500,000. The 42 bank-owned and short sales made up 10 percent of Island sales.

In King County, 22,723 units closed in 2011, with the peak month in June, at 2,362 closed sales. Mercer Island sales peaked in July with 33 closed sales. The closed sale dollar volume in all of King County was $8,911,679,101 per the Northwest Multiple Listing Service year-end report.

The majority of high-end sales did occur on Mercer Island and the Eastside, with 471 single family homes over $1 million moving, and 190 condominiums over $500,000 sold.

And on Mercer Island, the median sales price was $824,000 vs. $1,062,447 for the average sales price.

There wasn’t much new construction in 2011, but the median price for pre-owned vs. new construction was $385,000 for new construction, $50,000 more than existing structures.

Breaking the Eastside down by school district, the Bellevue School District saw a median sales price on single family homes of $550,000 with an average of $748,455.

The Issaquah School District’s median sales price was $530,000 with an average price of $567,540.

The Lake Washington School District’s median sales price was $493,245 with the average sales price at $546,025.

Jon Hunter, one of the branch managers at John L. Scott Issaquah/Sammamish Real Estate, thinks that people are starting to accept the changes in the economy and their impact on home values.

“People are seeing a new paradigm,” Hunter said. “The dust is starting to settle.”

Hunt also said that sellers are pricing their homes more competitively.

“With low inventory, low (interest) rates, unemployment going down — people are feeling this is the new normal,” Hunter said. “We don’t have a crystal ball, but we don’t see a big change coming.”

Hunter said there might even be some appreciation in Issaquah/Sammamish.

Here are some of the highlights from the 41-page NWMLS report.

A total of 38,198 single family homes and condominiums entered the market in King County in 2011, less than the 45,182 that came on the market in 2010.

An average of 10,205 active listings were available each month throughout the year, with the peak at 11,173 in June.

Hunter said he thinks there will be a slight gain in inventory this year, but also a slight increase in sales.

Pending sales in 2011 peaked in May with 3,113 for single family and condos combined, for a total of 32,668 pending sales reported in 2011. Of those, 25,657 were single family homes and 7,011 were condominiums.

Taking inventory into account with pending sales, the average monthly supply of housing inventory in King County last year was 3.75 months. Monthly supply is an estimate of how long it would take for the entire inventory of active listings to sell at the current pace, assuming no new inventory comes on the market. NWMLS states that economists consider a three to six-month supply to be a balanced market.

Hunt said buyers are dealing with feelings of not wanting to be the first ones to pull the trigger — they have trepidation not knowing if this is the bottom or not. But he said the smart money is out. He’s seeing more cash buyers — yes, buyers writing a check — and he said the stars are aligning for investors.

The median closing price in King Country, for single family homes only in 2011, was $340,000, down 9.33 percent from $375,000 in 2010.

Likewise, the median price on condos dropped as well, from $244,000 in 2010 to $204,000 in 2011, or a change of negative 16.39 percent. Windermere’s report states that even though Mercer Island condo sales were brisk, 50 percent of the condo sales were of distressed properties.

The highest priced single family home in the MLS system that sold last year was in Hunts Point, selling for $14,750,000.

The highest priced condominium that sold was in Kirkland, for $3,249,000.

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